SI231: The Perfect Fit for Trend Following ft. Richard Brennan

Richard Brennan joins us to reflect on the learnings so far from the new CTA series. We also discuss how to set your stop loss when entering a new position and why you should not allow your trend models to go "backwards", how to fit your model to price data and why it is important to understand the signal to noise ratio in your trading to avoid overfitting. Additionally, we discuss how random entries can work for your models, but why they are not truely random and the challenge of separating luck from real signal, why it is preferable to have an under-fit model as opposed to an over-fit model when developing a trend following system and how to reduce your chances of having an overfit solution. We round off our conversation discussing why trend following is not as easy as it might seem and much more.-----EXCEPTIONAL RESOURCE: Find Out How to Build a Safer & Better Performing Portfolio using this FREE NEW Portfolio Builder Tool-----Follow Niels on Twitter, LinkedIn, YouTube or via the TTU website.IT’s TRUE ? – most CIO’s read 50+ books each year – get your FREE copy of the Ultimate Guide to the Best Investment Books ever written here.And you can get a free copy of my latest book “Ten Reasons to Add Trend Following to Your Portfolio” here.Learn more about the Trend Barometer here.Send your questions to [email protected] please share this episode with a like-minded friend and leave an honest Rating & Review on iTunes or Spotify so more people can discover the podcast.Follow Rich on Twitter.Episode TimeStamps:03:17 - Reflecting on the CTA Series 09:55 - What happened this week? 12:42 - Q1, Jordan: Regarding setting stop loss when entering a position 15:39 - Q2, Mark: Entry lookback vs exit lookback? 19:23 - Signal to noise masterclass 36:03 - The Tom Basso experiment 46:34 - The challenges of creating models 52:40 - Avoiding overfit - Don't pick the "best" parameters57:23 - Avoiding overfit - Apply the Golden Rules01:00:19 - Using visual mapping 01:03:50 - Avoiding overfit - trade multiple markets01:07:34 - Trend Following is not